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Welcome to News & Events

Published on December 20, 2011, by in Industry News.

Welcome to The Fraud Practice’s FraudBlog; your source for updates on current events, commentary and best practices related to the eCommerce CNP payments and fraud industry.

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Press Release: The Fraud Practice Releases New White Paper and Hosts Webinar on Utilizing Post-Transaction Fraud Prevention in a Risk Solution

Although often overlooked, post-transaction monitoring and reporting are important secondary capabilities that can lead to improvements in a risk management program. Post-transaction procedures often increase the value of existing techniques such as velocity checks, link analysis and other techniques. This enables organizations to utilize these techniques more proactively to better prevent repeat and morphing fraud attacks rather than just containing them.

For all organizations, it is worth taking the time to consider how the use of post-transaction monitoring and reporting tools could augment and improve current risk management practices and strategies. To help organizations better understand these post-transaction techniques, The Fraud Practice has released a free white paper titled “Utilizing Post-Transaction Fraud Prevention in a Risk Solution” which is now available.

Additionally, The Fraud Practice is hosting a webinar on September 30th at 1:00 PM ET including David Montague, President and Lead Consultant of The Fraud Practice, along with Erika Gallo, Director of Global Risk Management for ReD, elaborating on the best practices and considerations for making effective use of post-transaction risk management techniques.

Request your copy of this free white paper

Register for the webinar

View the full Press Release

 
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Card Fraud Costs Asian Banks $400 Million per Year and is Growing Rapidly

According to estimates from FICO, card fraud in Asia costs financial institutions $400 million each year and is increasing by 20 to 25 percent annually. While this number seems very small relative to the tens of billions in card fraud losses worldwide, keep in mind that these are only the losses to issuing banks and card-based payments are much less common in this region.

In a brief BBC interview Dattu Kompella, FICO’s managing director in Asia, discusses the region’s growing middle class and their propensity to shop online. While China and other countries in the region have long been primarily cash-based economies that favor Cash-on-Delivery (CoD) payments for online transactions, the use of payments cards is increasing. However, the use of credit and debit cards is not nearly as common as in Europe and North America.

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CNP Fraud on UK Cards Up 23 Percent in First Half of 2014, Compared to 4 Percent Increase in Counterfeit Card Fraud

The latest figures on card fraud losses in the United Kingdom, coming from industry group Financial Fraud Action UK, support the expectations of most industry experts that when EMV rolls out in the United States it will have a positive impact on deterring counterfeit cards and fraud at the point-of-sale, but lead to more fraud attempts and losses in the Card Not Present channel. In short, CNP fraud is up nearly 25 percent, fraud on contactless card payments is negligible, and a slight increase in counterfeit card fraud is attributed to UK-issued cards being counterfeited and used in nations that have not yet implemented Chip & PIN / EMV.

According to Financial Fraud Action (FFA) UK, an industry group that works in partnership with The UK Cards Association, fraud losses from CNP purchases on UK issued cards in the first six months of 2014 totaled £174.5 million, a 23 percent increase from the first six months of 2013. Excluding mail order and telephone order (MOTO) transactions and focusing on eCommerce, losses between January and June 2014 on UK-issued cards reached £110 million, also a 23 percent increase from the first six months of 2013. Total online shopping increased from 2013 to 2014 over this time period as well, but by only by 16 percent, reaching £47 billion.

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FIS Acquires Clear2Pay, Possibly to Speed Up Development of Payment Network ACH Alternative

FIS Inc. announced the acquisition of Brussels-based payment technology company Clear2Pay for €375 ($493.3) million in early September. While the company announced the investment would bolster global payment capabilities and enhance enterprise payments solutions, the most interesting aspect of the acquisition may be the fact that FIS offers a real-time funds transfer service called PayNet while Clear2Pay has been involved with major payment system shifts such as SEPA (Single Euro Payments Area) and UK Faster Payments. The strategy behind this acquisition may be focused on the further development of a real-time funds transfer network to compete with NACHA.

The PayNet services falls under FIS’ payment network solutions and provides the ability for financial institutions to process instant person-to-person, account-to-account and wire transfers. The service offers real-time funds transfers riding on the EFT (Electronic Funds Transfer) rails that support ATMs and debit cards. They even position the product as a way to expedite bill payments replacing ACH. General Manager of PayNet, Peter Gordon, said there will be 500 banks on the network by the end of this year and by that time all of its banking core systems will be equipped to handle real-time transactions.

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DOJ to Congress: Amend Laws to Help us Prosecute for Overseas Fraud on U.S. Cards

While there have been many successful efforts to bring international fraudsters to justice in U.S. courts, this often requires cooperation from other nations. To make prosecution efforts easier against international fraudsters the U.S. Department of Justice is asking Congress for help, requesting amendments to existing law so that it is illegal to possess, use, buy or sell any stolen credit card that was issued in the United States, regardless of the fraudster’s physical location at the time when the theft or transaction occurs.

The Justice Department says that new or updated laws are needed as there are fraudsters and criminal organizations operating overseas and committing widespread fraud against payment cards issued in the United States. Often because the fraudster is never on U.S. soil, current laws in the way they are written can make prosecution difficult or not possible. Existing laws cover events such as someone abroad hacking into a U.S. computer, stolen cards used or possessed inside the U.S. and money transfers into the United States. However, being in possession of stolen cards outside of the U.S. and using them from outside of the U.S. are not enough for prosecution alone.

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Will Host Card Emulation (HCE) be the Catalyst NFC Needs?

Mobile wallets utilizing Near-Field Communication (NFC) technology for contactless point-of-sale payments have been around since 2011 but have yet to really catch on. While Google Wallet and others rely on NFC to communicate with compatible payment terminals the mobile carriers have been restrictive on allowing these apps to access the Secure Element where payment credentials are stored. Host Card Emulation circumvents this issue, meaning Google Wallet and other mobile NFC contactless payment applications may soon be available on a lot more devices.

The inability for many consumers to be able to pay with the credit and debit cards they already have, on the mobile devices they already have, and with the mobile wallet application they want to use has undoubtedly slowed consumer adoption of mobile contactless payments. But Host Card Emulation (HCE) technology, which is now available on nearly 250 million Android devices worldwide, can change this by eliminating the need for carrier participation.

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Visa Replaces V.me with Visa Checkout, Adds New Merchants

Visa launched their e-wallet, V.me, in late 2011, but this was discontinued in July, 2014 in favor of Visa’s new, although quite similar service, Visa Checkout. Since launch Visa has signed on notable merchants to accept Visa Checkout and will soon begin a major advertising push to drive consumer adoption.

Visa has discontinued their original e-wallet, V.me, but is still focused on maintaining high use of Visa branded cards in the CNP channel with their new Visa Checkout service. This is coming at a crucial time as increasingly more consumers continue to move from computers to mobile devices for making online purchases.

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Talks of Visa and Apple Partnership in Anticipation of September iPhone 6 Launch

Industry analysts have recently discussed the potential benefits to Visa and Apple should the two collaborate on mobile payments, even stating their opinion that a “partnership could be on the horizon,” and potentially in time for the launch of the iPhone 6. Is this potential partnership already in the works or is it just speculation?

The possibility of a Visa and Apple mobile payments partnership made multiple media reports following statements from multiple industry analysts with different organizations. Josh Beck of Pacific Crest explained how news of recent changes and improved security with Visa’s systems could allow tech companies to grow and enhance their mobile payment initiatives. Roger Kay, analyst with Endpoint Technologies Associates, seconded that it makes sense for “Apple to have a partner for the back end,” and that Visa would benefit from partnering with Apple who is “so deeply entrenched with consumers.”

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ACI Worldwide Announces Acquisition of Retail Decisions, ReD

ACI Worldwide announced their acquisition of an industry veteran fraud solution provider Retail Decisions (ReD) for $205 million in cash in late July. The acquisition will help ACI bolster their services for both merchants and financial institutions. The deal is expected to close during the third quarter.

The acquisition of ReD also boltsters ACI Worldwide’s omni-channel payment services. ACI Worldwide CEO, Philip Heasley, discussed the issues retailers will face “operating disparate systems for their online, mobile and point-of-sale operations,” but believes that the “ACI and ReD together have an unrivaled merchant retail solution,” that is “global, omni-channel with integrated fraud management built on Universal Payments technology.”

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Mobile Wallet Isis to Change Name, Begin Rebranding Effort

The mobile wallet joint venture Isis founded by AT&T Mobility, T-Mobile USA and Verizon Wireless is in the process of changing their name to avoid confusion and mis-association with a militant group that has garnered much media attention of late, commonly referred to by the acronym ISIS.

Not to be confused with the Islamic State of Iraq and Syria (ISIS) militant group, the U.S. mobile wallet service Isis, backed by three major mobile network operators, is actively working on a new brand and name. Michael Abbott, Isis Mobile CEO, elaborated that even though the association between the mobile joint venture and the terrorist group is coincidental, the mobile wallet company has “no interest in sharing a name with a group whose name has become synonymous with violence.”

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© The Fraud Practice LLC 2012